Reasons Properties Fail to Close

According to Trulia, 3.9% of sales failed in 2016.

The causes for such failed transactions can be attributed to a number of causes:

■ Property title issues: prior to the close, the mortgage company will conduct a search usually through a title agency to make sure there are no liens or defects for unpaid debts or outstanding financial responsibilities on a property. Such title-related issues can interrupt or even cancel the purchase of a property, depending upon the degree of the defect.

■ The failure of the home inspection: when a buyer puts an offer on a property, it is usually subject to the home inspection. The home inspection contingency permits prospective buyers to walk away or renegotiate the price based upon the results found in the inspection report.

■ Low appraisal valuation: since nearly 80% of sales are financed (the share of cash sales in residential sales trended down to 21% in 2017, which was down from 23% in 2016, according to the December 2017 REALTORS® Confidence Index Survey), when price is beyond home value, the buyer may not qualify for a mortgage.

■ Buyer home contingencies: this means that when the buyer needs to sell their current home concomitant with the purchase of the new home, they usually submit an offer with a home sale contingency stipulation. This clause allows them to withdraw their offer if their current home doesn’t sell within a specific time period, which usually involves the use of those funds for the new purchase.

■ Failure to obtain financing: this typically occurs when a buyer who has been pre-approved encounters a change in their status, like the loss of a job.